As a regular subscriber to the REI Magazine , you may recognise our 2013 Real Estate Investor of the Year Award recipient , Karl Landman . We recently caught up with Karl to find out about any changes to his property investment strategy that he may have implemented in the last three years .
Winning the award in 2013
Karl managed to impress our expert panel of judges in 2013 with his sizeable portfolio . At the time of receiving the award , his portfolio included seven properties , one cottage , and a net worth of R11.5 million ‒ all with no debt .
It was also his hard work , ethics , high levels of integrity , good cash flow and low risk approach that caught the judges ’ attention . They were impressed with how he had managed to take responsibility for his own investments and turn a period of financial loss completely around . In addition , the panel felt that his philanthropic approach and desire to make a difference in people ’ s lives made him a clear-cut winner for 2013 .
And they were not to be disappointed . Karl immediately pledged his R50,000.00 cash prize to an elderly lady in Benoni to help repair her leaking corrugated roof and water-damaged ceiling boards .
For Karl , winning the 2013 award was a recognition of his and Laree ’ s perseverance in achieving a retirement goal they had set in their mid-twenties . “ It made us realise how far we have come from very humble beginnings and makes us grateful for the opportunities we have had during life ’ s journey ”, said Karl .
Growth and restructuring Since winning the Real Estate Investor of the Year Award in 2013 , Karl and his wife , Laree , have continued to focus on growing their asset base and have also restructured their entire portfolio . Karl shared with us that they managed to achieve complete financial independence two years ago , and now live debt free . When asked about this achievement , Karl pointed to his property investment strategy over the last 28 years , which he feels has been the key driver for their current financially independence .
Debt-free and independent living has not ( yet ) convinced Karl to put his feet up and enjoy a spell of retirement , however . He continues to work as a General Manager in the medical / pharmaceutical industry ‒ simply because he loves the business .
Minimising risk and matching life cycles The Landmans decided to restructure their entire portfolio in 2016 , firstly to align with their life stage and , secondly , to minimise risk associated with geopolitical and currency events going forward .
For Karl , property remains the focus of their retirement plan and overall nett worth , which has expanded by 53 % in the last three years to R17.6 million ‒ all with no debt .
“ Property now represents 50 % of our asset base but has been restructured into 40 % fixed property and 10 % listed property , both domestic and offshore . We are passionate about property but strongly believe in a holistic / diversified investment approach that also considers other supplementary asset classes ( that add capital growth and cash ) and offshore exposure .”
“ We have increased our offshore exposure to 24 % of our entire portfolio , as a hedge against geo-political and currency risk ,” shared Karl . “ We considered buying an offshore property but I feel the risk associated with being so far away from a fixed property is very high versus a USD REITs ( managed income producing real estate investments ). REITS provide a reasonable , and sometimes better , nett return , without concerns about tenants , repairs and maintenance . Never mind potential legal matters .”
Ongoing property sales and investments The Landmans have since sold all their 2 bedroom units , due to lower returns because of increase in cost and lower rental increases . Karl explained that they get better nett yields on 3 bedroom simplexes , townhouses and clusters .
“ Our next step is to invest purely in clusters on the East Rand within the R1.2m and R1.5m price range . Our latest acquisition is in Kingswood ‒ a 3 bedroom , facebrick cluster unit we bought cash for R1.350m and currently valued at R1.650m . We spent R100,000.00 on repairs and maintenance and currently receive a 9.1 % gross annual rental yield on this property ( with the repairs and maintenance costs included ).”
THE LANDMAN ’ S PORTFOLIO BY ASSET CLASS :
• Fixed property 40 % - Monthly income
• Domestic listed property 2 % - Monthly income
• Foreign USD Listed property 8 % - Rand hedge
• Domestic Equity 24 % - Capital growth & dividends
• Domestic Cash 6 % ( High Yield Cash Management Fund ) - Always keep 12 months cash at hand for repairs , maintenance , unforeseen events and buying investment opportunities , like undervalued properties
• Foreign USD Equity 11 % - Rand hedge
• Foreign USD Cash 1 % - For travel
• Domestic Bonds 6 % - Monthly income
• Foreign USD Bonds 2 % - Rand hedge
www . reimag . co . za MARCH 2017 SA Real Estate Investor 17